Stobart impacted by commissioning delays at biomass plants

Stobart Group Ltd. has released interim results for the first half of 2017, reporting that its energy division has been impacted by commissioning delays at third-party biomass power plants.

Regarding its energy business, Stobart said it has successfully put in place a renewable energy fuel supply chain to supply 2 million metric tons of biomass to power stations across the U.K. According to the company, six of those facilities are new power stations in either the commissioning phase or due to be commissioned soon. Delays at these facilities, however, have impacted short-term volumes for Stobart.

During the first half of this year, Stobart said variance in actual volume compared to notified volumes from these new power stations was approximately 190,000 metric tons, with only about 40,000 metric tons supplied. Stobart said that during the second half of year, it expects to deliver approximately 330,000 metric tons under those contracts, based on the latest notifications from those power plants.

While Stobart said some of the delays are longer than it could have anticipated, long-term total volume is not affected because contracted volume starts post commissioning at the start of commercial operations. The company also noted its EBITDA per metric ton is currently ahead of its stated objectives, and its strategic targets remain unaltered.

Moving forward, Stobart said it aims to supply 2 million metric tons of biomass annually by 2018. The company said it believes it can meet that target, but is dependent on the successful commissioning of third-party power stations.

“Our efforts to meet our energy division targets have been frustrated by delays experienced by our partners in commissioning power stations,” said Warwick Brady, CEO of Stobart. “This has caused some volatility as the new plants come on line, and this is impacting short-term performance.”

Stobart also has divisions dedicated to aviation, rail, infrastructure/investments, along with a division known as Stobart Capital.